Why A Muxtape Comeback Won't Last

Music sharing site Muxtape has been down for almost three days. Is it ever coming back?

Maybe, but probably not for good. The company -- essentially one guy, former IAC/Vimeo employee Justin Oullette -- insisted on its blog on Monday that it's "not closed indefinitely." But we've seen no signs of life. (And neither Oullette nor investor Jakob Lodwick has returned our emails.)

What do we know?

• Muxtape blames the Recording Industry Association of America (RIAA) for its blackout. Their site reads: "Muxtape will be unavailable for a brief period while we sort out a problem with the RIAA."
• Officially, the RIAA says, "For the past several months, we have communicated concerns to Muxtape on behalf of our members. Muxtape has not yet obtained authorization from our member companies to host or stream copies of their sound recordings." We are told that the music labels' industry group has sent the site multiple cease-and-desist letters.
  
• Muxtape doesn't seem to have attracted any investors beyond Lodwick, whose initial investment will eventually run out.
  
• Muxtape's sole revenue source appears to be affiliate fees generated by referring people to Amazon and/or iTunes MP3 downloads, which can't amount to much more than a few dollars.
• Muxtape has real costs. A wild guess at its hosting bill: Assuming Muxtape has 100,000 50-megabyte mixtapes uploaded, each of which gets played 5 times a month, that's a roughly $5,000 monthly bill from Amazon. We think this is a high estimate. But even half of that is a real expense for a company with essentially zero revenue.
  
• Muxtape hasn't sold itself -- either to a bigger media company that can shoulder its costs or a record label looking for a hot brand.

Bottom line: It's hard enough to make money in the online music business without legal pressure. It's even harder with the RIAA on your tail. Oullette's options are limited: Find more money and a good lawyer, find more money and switch to a legal business model like 8tracks, or shut down.

See Also:
Muxtape Shut Down By RIAA?
Muxtape: Make A Mix Tape, Make Some Cash?
8Tracks: A Free, Legal Music Service We Love